tv Discussion Focuses on the U.K.s Exit from the European Union CSPAN August 29, 2016 2:00am-3:20am EDT
hopkins university school of advanced international studies. he is a graduate of grinnell college call and earned a master of arts and master of philosophy and his degree from yale university. relative to today's discussion the subject of his thesis entitled from empire to europe, material interests national identities, and the british policy towards european integration 1956 to 1963. with that i will hand it over. >> thanks very much. it is a pleasure to welcome you all to the heritage foundation here today. with this panel on brexit the next step. about three months ago several of us with here for a very similar panel on brexit. then the possibility that britain might leave the eu was just that, just a possibility. today, however, it is a fact. and behind me on the screens you
will see how heritage reacted to the vote on the morning of june 24th by flying the union jack on top of the heritage foundation along the stars and stripes. on behalf of the heritage foundation, especially the margaret thatcher center for freedom where i work, i would like to congratulate everyone who play add part in that victory. but of course brexit is not yet a fact. the leave campaign that won the referendum but as of today, britain is still in the european union. the vote was in one sense the culmination of a very long campaign but in another sense it was just the start of the process. and we're here today to talk about that process. now, since the voted on june 23rd i observed one thing. if there's anything that people like to do is tell stories. and since june 23rd people in the u.s. and of course people in britain have been telling stories about brexit. before the vote i joked that brexit was likely to become the
new global warming. in other words, it would end up being blamed for everything that went wrong in the world and in your personal life. first, there came a quick spade of stories about how brexit was causing the british economy to tank. but as the guardian reported yesterday morning, indicators defy brexit fears. the economy isn't collapsing. if anything in fact it's booming. but the much more persistent story is how it's a backlash against globalization. it's funny but i don't see wanting to travel less, masala,ess tikka raising tariffs or using the internet less or quiting nato, the u.n., or any other international organization. what i do see, however, is
british groups standing side by side as one of the new brigades in poland and astonia. the left and the ignorant seem incapable of recognizing that brexit wasn't a vote against globalization. it was a vote against specific policies and actions undertaken by various british governments and the e.u. that were extremely unpopular. brexit does, however, herald the end of an era in history -- the end of the era that began in the late 1950s when britain began to enter a decline. for britain after about 1959 europe wasn't about broadening its horizons. europe was about believing that britain's horizons were narrowing. believing that britain's problems began at home and europe on the whole was better governed. over the course of the last decade that belief, always wildly exaggerated, stopped making any sense at all. i think everyone on this panel, myself included, has been a critic of various british governments since 1997.
but governmental performance is, after all, relative. would you rather have britain's terrorism problems or france's terrorism problems? would you rather have italy's debt or britain's debt? would you rather have greece's currency or would you rather have the pound sterling? would you rather have germany's migrant problems or britain's? for britain, europe moved from being answer answer to a problem to simply being a problem. now, of course bureaucrats don't see it that way. for them to answer to any problem is always the same. more europe. just two days ago our european commission president famous for his comment that when it's important you have u to lie, asserted that national borders are the worst thing ever. really.
in this world of sin, slavery, and american swimmers in rio, national borders are the worst thing ever? that's an exaggeration, i think. i can promise you that although it is a low bar everyone on this panel today has a much tighter grasp on reality. today we're glad to welcome four speakers here after which we'll do some q&a. our first speaker competitive enterprise institute vice president of strategy focuses on financial regulation, employment, and immigration regulation, and free market environmentalism. he's widely published and is the author of several books. also a visiting fellow at the u.k. adam smith institute, board member of the taxpayers alliance, and an advisory board member of the young britons foundation. before coming to cei directer of research for the cufrpblt department of transport received mba from university of london and ma from oxford. our next speaker is directer of
the association and victorious better out campaign. widely published including essay, "thet future is bright; the future is golden." both a bitish and swiss citizens and holds a first class degree from university of york and master's degrees from both city university of london and waric business school. with ian he is the coauthor of cutting the knot a roadmap for british exit which won a 10,000 pound award in london in 2014 as part of their brexit prize competition. today, speaking here at heritage to launch the revised version o of that prize-winning esace which i believe is now available on line or will be very shortly. our commentator today is marion. the editor of human progress.org and senior policy analyst at cato institute.
a common theme among our panelists, extensively published with major articles in leading publicications. he received his bamplet from the university of the whit waters rond in south africa and his phd from international relations from the university of andrews in great britain. finally, we're glad to welcome dr. victoria coats. she is national security advisor to senator ted cruz. she received her bamplet from trinity college, the one in connecticut. her master's from williams college. and her phd from the university of pennsylvania. after blogging on foreign policy in the early 2000s under a pseudonym, she worked for former secretary of defense donald rumsfeld on his memoirs before becoming an adviser to former texas governor rick perry and then to senator cruz. earlier this year she published david's sling. so let me turn it over to this extremely accomplished and diversed panel for their
comments after which we'll take questions. ian. >> thank you, ted, for that gracious introduction. i should clarify for the record that i was not directer of research as her majesty's. i was a lowly executive officer in her majesty's department of transport. but it is a delight to be back at heritage today and to share
the platform with my excellent coauthor roary and with marianne and victoria. today rory and i are releasing the updates to our 2014 iea brexit prize runner up submission entitled cutting the gordian knot. it's called that for a very good reason. the gordian knot for those unfamiliar was a fabled knot in the city in asia miner so complex that no one could unravel it. in many ways that is the perfect analogy for the situation in which britain now finds itself. for 40 years it has indwind itself more and more into the tangle of institution laws and regulations that is called the european union. now the british people have spoken. they want out. her majesty's government finds itself having to unentangle that knot but this time there is no alexander to slice it open with one swish of the sword. neither rory nor i i tend to discuss the merits of brexit tate.
that was discussion was for the campaign period and it has now been settled by the vote of the british people. talk about parliamentary and sovereignty challenges, but the reality is that the british people were given the choice and chose brexit. it will happen. that is not to say that brexit could not prove to be a disaster. it could if her majesty's government makes all the wrong decisions. a britain that shuts off shop against the rest of the world and retreats into some idea of splendid isolation will surely be a poorer place. every principal free market economics tells us that. there are forces in british politics that want to return us to the economic conditions of the 1970s. and although those of us old enough to remember those conditions could tell them that they are stark raving mad for wanting that, they are unlikely to listen. that is why roary and i believe that it is important that the new ministry and administrators to set out quickly the vision of an open welcoming britain, one founded on well established principals of free trade and free enterprise that will attract investment from and do business on favorable terms with the entire world.
not just a little corner of it called europe. so what do we think needs to be done? how can her majesty's government cut that knot and set out on the road towards becoming a successful exi as britain was in the olympics? first, we believe that her majesty's government has to invoke article 50 of the eu treaties as a matter of international
law. to go ahead and start unilaterally making new deals while still a member of the e.u. by its own rules would be a serious breach of the vienna convention and would make britain a pariah. but we must be certain what this means. it will mean, according to article 50 itself, the end of the application of the treaties and the protocols there to in the state concern from that point on. it is an irrevocable step. it is imperative that her majesty's government has its ducks in the row before it takes this step. when her majesty government invokes article 50, the u.k. and the european council will negotiate the terms of the exit not the commission, although the commission may act on behalf of the council but the responsibility is given to the european council. and that will almost certainly include the phasing out of the application of eu programs to the u.k., the status of trade arrangement for third parties and the status of u.k. and eu nationals resident in the other jurisdictions. yet simply negotiating does not mean that the deal is binding. article 50 requires the consent of the e.u. parliament to any deal. while the council is likely to be pragmatic because it is composed of the governments of member states with a lot to lose in the event of a bad deal, the parliament may prove more political in its approach and could even prove vindictive. in that sense, the u.k. and the eu are stuck in a classic prisoner's dilemma. there are political reasons why each side might prefer to see the other sink but a better outcome will occur if they cooperate.
let's hope the leasheds realize this and the u.k. leaders aren't tempted to ignore the realities on the ground. turning back to what her majesty's government must do to start pulling on the strings of this gordyan knot the first thing domestically will be the repeal of the various acts of parliament that have entrenched the treat ears of the european union into british law. yet that is really just the first string. the bulk of the knot is made up of the huge number of laws and regulations primary and secondary legislation that have been encoded into british law as a result of the treaties and eu directives. the trouble is that repealing the entire lot, as desirable as that may sound at first hearing, is probably neither feasible nor desirable.
plenty of it would have been encoded anyway. perhaps in a different form. and some of it representeds commitments to global terms of regulation. moreover, there has been the common practice of gold plating of regulations whereby regulations have been made more onerous. some have suggested that parliament should look at all of these together and propose a great repeal bill or something similar. this would swamp all other parliamentary activity thanks to the sheer volume of the laws
concerned. we don't actually know how many eu related laws there are. but between 1998 and 2004, germany incorporated 750 directives and 18,187 regulations into its legal code just in those six years. many of those were truly miner, for instance relating to specific weights and measures but that underscores that parliament cannot hope to deal with all of them at once. nor can we leave it up to government to partners. i am a refugee from the british civil service and i know how it works. civil servants are perennial victims, seen and unseen problems. but they have interest groups lobbying them all the time pushing the effects of a regulation in front of their eyes. but they rarely consider the unseen effects of the dispersed costs of a regulation around the country. i would wager that it's best up to government departments we would see less than 5% of regulation repealed. that's why we need to look to a different model. and i suggest that should be the successful model the united states has for successfully depoliticizing the contentious issue. the basis realignment and closure commission. the bases commission, or brac, has a model whereby it takes decisions to close down military bases out of the hands of congress.
the commission looks at the issue, holds hearings, and then presents a package of closures to congress for an up or down vote. congress can either accept their decision or will reject it. they can't amend it. so i think we need something similar with regulatory reduction in the u.k. so that is why we have proposed setting up a royal commission of regulatory reduction, target of say reducing regulation by 25% which would provide massive benefits to the u.k. economy and presenting a package of reforms to parliament for action as a whole. by these means we suspect the u.k. could start reducing its regulations substantially within five years of brexit. the bench for nonregulations could go and the regulations of values could be kept despite the lobbying.
one final word is important. another thing her majesty's government will have to decide very quickly is whether or not to apply for membership of the european economic area, associate membership by membership of the european trade area like switzerland or go it alone. many have described leaving the eea as the doomsday scenario and even respectable free market think tanks suggest that the membership is an acceptable solution. i even thought so briefly myself but then rory administered the smelling salts and i put myself together. it's unacceptable for reasons first brings with it a significant degree of regulation.
certainly britain will be outside of the common agricultural and fisheries policy and will regain control of its waters. plenty of regulation will continue to apply. and this time the u.k. will actually be without a seat at the table negotiating the terms. 24 relates to the second problem. the eu has a democratic deficit which was a major concern of the voters. this will be made even worse by the u.k. just being a member of the eea. and third, the eu is very likely to insist on free movement of people as a nonnegotiable aspect. it is getting talked with switzerland over this issue. there is an exception for lichtenstein in the treaties but that is a particularly small straw to grasp. britain is not lichtenstein however much i wish it was. the two main motivating factors behind the vote we know was a desire to take control of britain's laws and borders. the eea may be many options but it is not brexit in these terms. on the eu side britain's membership wouldn't be brexit either. the european parliament has received advice that the correct way to achieve any amembership would be treaty change not the use of article 50. for the eu brexit has to mean brexit as well. article 50 ends all application of the treaties not just some of them.
it is meant as a deterrent to exit and cannot be treated cavalierly. so brexit must mean brexit. britain must leave the e.u. entirely. that is the road that presents the greatest dangers but it also in our view presents the greatest opportunity. and now roary will describe some of those opportunities. [applause]
>> well, thank you very much. and thank you also to the heritage foundation for inviting me and ian to speak today about our plan, cutting the zpwordian knot. it is the second time we have written such a plan. the first time, as ian laid out, was for the institute of economic affairs two years ago. and once a former british prime minister said a week was a long time in politics i think we can agree two years is a long time. and what have we achieved in that time? what i think we need to talk about now is the opportunity that the united kingdom has in embracing brexit. ian and ted talked just now about the potential roads heads and the potential pittfalls the united kingdom could potentially fall into.
i want to, like ian, address some key points. and i think we are never shy in the past two years to address the challenging questions and certainly with the project still on our back we were very keen to press the positive of brexit. indeed, this also goes to policy areas such as immigration, agriculture, and inward investment. and what we want to do in this particular report is to lay out the british government what steps they can take to harness the potential and maximize the potential for britain in this world. immigration was a particularly start anda contentious issue. it remains so today. but the united kingdom, voted to take back control. that doesn't mean just take back control with a few safeguard measures here and there administered on the prospect of renewal. it actually means defining a system that fits the united kingdom by the united kingdom for the united kingdom. and to this we say there are
benefits in what we term a tariff system, an immigration tariff system. now, over the course of many years brexit campaigns have been called many things. indeed, they have been called so many things i don't think ten minutes gives me enough time to relay at least part of them. but what we propose and what other people have proposed in a nationality neutral immigration system is by no means the racist card that our opposition and our opponents have tried to cast us as. the idea of an imgration tariff, however, we believe has a massive benefit in alleviating the burdensome regulation that a state-sponsored tariff -- state-sponsored point system might generate.
indeed, we also believe that the system as administered in our plan will allow for net benefit to take into account the skills and the income generated from the highest skills individuals that come to the united kingdom. ultimately, we want to generate the assistance where the best people from around the world want to come to britain can come to britain and finds their home in the united kingdom. i think this lays out a plan without the stains sponsored burden that other proposed nationality neutral plans might generate. the second i would like to raise whether it be countries around the world, non e.u. and e.u., there are significant improvements that can be made
and generated through a free market approach. now, what ian and i have done is looked at these approaches, looked at other countries who have administered a protectionist measure and actually seen the limitations of such approaches in comparison to one guiding light. and that guiding light is the new zealand. the new zealand option has laid out the way the united kingdom should proceed with regards to agriculture. it is a free market approach that has embraced globalism, has embraced free market, and embraced innovation and change. ever since the 1980s when the new zealand government said no, the new zealand farming sector has thrived. it hasn't just thrived because of the innovation that's been generation from it. it thrives because new zealand as a country has reached out to new markets and embraced new potential.
as a result, new zealand's stock index has populated roughly 10% of its agricultural firms. indeed, agriculture has been so successful it is one of the top two industries in new zealand. and with the united kingdom branding power on the world stage i believe that such things as british beef newly introduced into the united states and indeed other such materials can have a great branding prowess on the global stage. so the big one. investment. it is through project fear we were told that it would finish. effectively foreign investment would die on the brexit vote. well, the opposite has been true. two months to the day that britain voted to leave the european union there have been 54 separate deals accumulating roughly 38 billion u.s. dollars. now, that to me does not seem
like a slippery slope. indeed, i think it's something to embrace. and in this plan cutting the gordian knot i think the united kingdom if it embraces a global free market approach can generate more for the companies and the globally orientated ind industries within the united kingdom and to the benefit of both its people and its trading partners. one final thought on that. because trading partners is key in this particular realm. we have friends in the united kingdom around the world. this is something that the campaigns during the actual e.u. referendum was putting on the table. we have friends around the world and far from the isolationist position that some of the remaining indeed advocated we believe that the united kingdom through maximizing its global potential through financial sectors and
elsewhere can become a greater trading nation and indeed to utter the words of winston churchill embrace the open sea. as a result, ladies and gentlemen, i commend the cutting the gordion knot publicication and its revised version, and as ian said you can download it. thank you very much. [applause] >> thanks to all of you. let me first congratulate ian and rory on a thoughtful and informative paper. i am particularly grateful for the authors for their valiant effort in finally explaining to
me the difference between the european council, the council of the european union and the council of europe, which are all different. and if you can grasp the distinction between the three, then particle physics should be a walk in the park. but joking aside, the paper does provide an excellent service in outlining the different challenges that britain faces in euricating itself from the and the options before british lawmakers in meeting tose challenges. now, i have known ian for many years and i'm happy to report that we see eye to eye on most things. and as such i don't have any serious disagreements with the based on clear
and time-tested free market principles. that of course is also a risk for most people including european and british decision makers to not see the world through the prism of free market economics and may pursue policies that will not result in further liberalization of the british economy or optimal results for the british people. in fact, the possibility of backsliding on economic liberalization was always in my view the best argument raised by some thoughtful libertarian and conservative critics of brexit. put differently, all the good suggestions that ian and roary offer in terms of policy reform after brexit may go unheeded. and yet, i firmly believe that brexit was a risk worth taking. centralization of power in brussels just as centralization of power in washington increases the risk of systemic failure. if wrong policy is enforced for everyone, be it the euro in the e.u. or very high federal corporate tax rate here in the united states, then everyone will suffer the negative consequences of bag foreign policy decisions. and that is why competition is better. unfortunately, the concept just as the concept of state powers here in the united states has been tossed aside in favor of more decisionmaking at the
center. there's a strong case for maximum policy autonomy of the smallest possible territorial units and jurisdictions which are much better suited to react in a timely fashion to rapidly challenging circumstances in a highly competitive global economy. unfortunately, the concept just as the concept of state powers here in the united states, has been tossed aside in favor of more decision-making at the center. there's a strong case for maximum policy autonomy of the smallest possible territorial units and jurisdictions which are much better suited to react in a timely fashion to rapidly changing circumstances in a highly competitive global economy. as opposed to relying on large couple ber some units which
suffer from competing preferences and collective action problems. a free trade deal between the eu and candida, which, for example, is held up by of all places, romania. and so, yes, britain may opt for policies but that too will be a useful lesson for other countries, whether they are happy in the eu, or whether they are thinking of leaving the eu. whatever happens in the u.k. the e.u. will probably never be the same. i think that there is a likelihood that we have seen the coming and going of what one might call the peak eu. prior to june 23rd referendum on british membership of the eu, british voters were subjected to a barrage of warnings and dire criticisms about what would happen to the british economy and the british people have britain left. domestic,oreign and
predicted recession and urged voters to remain. britain they argued would be isolated and it might even, so the argument went, lose its seat on the united nations security council. and then the british people voted to leave the e.u. and the response was by and large mild and measured. to everybody's surprise, much of the blame for the british withdrawal from the e.u. was placed on the heads of the bureaucrats in brussels. for example, the astonian president said that junker's behavior had been abominable. the foreign minister, whose name i will attempt to pronounce, said that the european institution starts to admit they made a mistake and that at least part of the european leadership should stand aside. the prime minister said the british people have reacted to european policy and that nobody has the right to be angry with the british voters.
the czech foreign minister said that junker was not the right man for the job and somebody in the eu should be thinking about quitting. the hunger in prime minister blamed brexit on the european ineptitude in handling the mass immigration crisis. and together the countries called for the eu executive to be reigned in and for confidences to be returned to the european states. now, consider the engine of european integration, france and germany. only a week after brexit, the french finance minister stated that everything will be on the table when negotiating with the british. implying that britain would be offered, if it wanted to, membership of the single market on terms acceptable to the british electorate. i personally agree that that shouldn't in fact be an option.
the republican party canled date for french presidency has called for new balance of power between brussels and the member states. senior german ministers have advocated for the trimming of the powers of the commission. so, why did that happen? well, great britain may be leaving the e.u. but it has not fallen off the edge of the earth. the country still remains the fifth largest and the fifth largest military power. it is in the interest of all of its trading partners that britain is safely anchored in an international economic system. eu, britainof the will still be a recipient, or rather, germany will still account for 10% of the british imports and france will account for 6% of british imports. similarly, in or out of nato , britain remains an important
military power and the second-most important power of nato. as such, central european countries, especially in poland and the baltics, will do whatever is necessary to keep britain happy in order to deter from putin's russia. national interests of the european countries differ greatly. communist parties, for example, are much more fearful of russia, then say france or portugal. but the national interests of the e.u. member states do intersect in one crucial way. they all want a good post brexit relationship with britain. some wanted for commercial reasons. some wanted for reasons of national defense. put simply, national governments face incentives that are different than the incentives faced by bureaucrats. the chief objective of the latter is the pursuit of an ever closer union and they appear to
be willing to punish those who make the achievement of that goal more difficult. but national identities of the european states have been evolving separately and often in competition with one another 400 and sometimes thousands of years. pan european does not exist. the vast majority of the european peoples, for them, being european remains a geographical, not a political distinction. people'sbecause identities are not formed, at least in europe, but attachments to abstract principles of liberty, equality, fraternity and such. but by cultural religious historicle and linguistic ties. in conclusion, the reactions of the european states to the outcome of the british referendum on eu membership, clearly shows that the national interests and consequently, the
nationstate, remain the basic motivations and basic living blocks of international relations and of european relations and likely to remain so. thank you very much. [applause] >> >> thank you, for these fascinating perspectives. i don't want to take a lot of time this afternoon because i am really care to learn. congress has been in session only very briefly since brexit took place. they're coming back to work in two weeks. run for your lives. [laughter] be a reals will opportunity for us to explore some ideas as both a historian of and a practitioner of democracy. i acutely conscious,
am particularly in recent months , of the challenges that democracy represents. but at the same time, it's been wonderful to see a very positive example of democracy in action and what we want to explore on the hill is the opportunity that this presents to us. and as ian was talking about, the gordyan knot, i was thinking about that moment some 2409 years ago when alexander the great was confronted. ingenious idea to split it in half was a lady for -- in half was only the first step. he then had to go on and conquer asia. so i think brexit can stand as the moment of the slice but the conquering of asia is very much what your new essay addresses. and i think for us, as we look at your conclusions and your path forward, in some ways, it is a cautionary tale. of this unbelievable
burden of regulation that has come out of brussels and has tangled up your own legal system is something we have to be intensely conscious of as a proposed new legislation over here. and as predictions are very difficult about what our political makeup is going to be going forward, the thing i found myself reflecting on, as our critical role is to redefine what free trade means. the concept of free trade has been to demonize relentlessly over the course of the last year. he has turned into basically, a dirty word in american politics. and i think we do need to accept some culpability in that situation. i think the both atlantic and pacific trade deals, like the eu, were in concept, supposed to lead to greater liberalization, greater freedom, greater economic interaction. but as someone who is familiar
with the text of both of those deals, and anyone else who is can tell you, that is not the case. that the liberal agenda of regulation, of environmental reform, of labor reform has crept in and permeated those deals to the point that they are in many ways, i find, antithetical to the principles of free trade. as you look at brexit and what is possible, and this is something senator cruz was pleased to take the lead on, letter torms of the president obama, and in his op-ed in "the times," in which i actually, but also made this argument that free
trade deals should be one certain thing. but what opportunity does brexit post to us in the congress and beyond to redefine free trade and to look at the bilateral deal between the u.s. and the u.k. which look at geography as a determining factor if we're going to look at multilateral deals. because what i might want to do with great britain might be more similar to what i want to do with say japan, then what i might want to do with reese orsay, vietnam --i might want to do with greece, or say, the non-. it is not going to be a one zie all.ze fits i think we will lose sight again of an opportunity. i would also like to reflect on the very positive developments that ted was talking about in terms of armageddon not happening in the u.k., about
which we are all very pleased in congress that the world did not end. and again, i think that is a powerful reminder that the prioritizing the status quo, while stability and predictability are both very valuable and commodities that are in somewhat short supply these days, there can be worse things than -- i'm sorry. the status quo is not necessarily our ultimate goal. and change, while disruptive, can be positive. what i would like to leave you with is really a challenge to all of our friends at heritage, as well as our friends in the u.k., to spend the coming days, end ofmonths him of the e, the this congress and the beginning of the next one, looking at what that free trade deal between the united states and the united kingdom might look like. i was very struck by your
comments on immigration. i think this is going to be one of the great challenges to all of our nations as we go forward. i was also very heartened by what lori said about the financial sector. i think that could be one of the great unifying elements that could bring the u.k. and the united states even closer. i don't want to take up any more time that we can use for questions but i think if we can pursue those ideas, this can be a really valuable experience. thank you very much. [applause] >> thank you very much. victoria, and thank you to all panelists. i'm going to take the usual moderator's liberty and ask the first question. after that, we will be happy to take questions from the audience. i am going to ask particularly, ian and rory, and also mi
arianne to take th victoria's question about the possible structure and nature of a u.s.-u.k. free trade area agreement, both in terms of the content of the agreement per se, florida of the broader question of whether it should be a u.s.-u.k. deal, whether it should be a revised deal, or a new north atlantic free trade area, whether it should be worldwide. >> there are many different ways this could go. what is very interesting is when senator phil gramm looked at this issue back in 1999, i think it was, the benefits that would accrue to the u.k. and u.s. were surprisingly low as a result of free trade. already have largely free trade between the u.k. and the u.s.
at the time, they were just a ariff barriers that had to be reduced. the big question is nontariff barriers. that is where, i think, there has been a big increase of non tariff barriers on both sides since those days. i think any free trade agreement would have to concentrate on non tariff boundaries. there, i think the best thing to do would be to look among tariff barriers through a prism of regulatory equivalence, rather than regulatory harmonization. as victoria was saying, what's happened with traded deals over the past 15 years or so, if you notice, american free trade deals have stopped being called free trade deals. they are now trade and investment partnerships. they're not free trade deals. that is because they have harmonized the regulatory
burden on both sides. the nontariff barrier disappears. but it's really still there. just on both sides at the same time. so, i think what would be helpful is for us to return to the, you know, the gold old federalist idea of regulatory thattition and recognize regulatory systems are equivalent, but they don't have to be harmonized. they can be in competition with each other, so we can experiment and find the best system of regulation, the one which provides the most benefit with the least burden on business. think,t's the way, i a free trade agreement should really have to concentrate on those areas. in terms of the potential structures, yes, obviously, a good old bilateral u.k.-u.s. free trade agreement is perfectly possible, but i think
we could be more ambitious. in the paper, we suggest a couple of other ideas. the possible expansion of nafta to be a north atlantic free trade area, also including iceland and norway, if ireland should choose to join us, we are very well to have them on board. that sort of thing. but then again, there is another idea, which was actually dreamt up in these halls several years ago. our old colleague dr. john houseman came up with the idea of the global free trade agreement, global free trade association, which would be open to anybody who met certain criteria. and he has developed this idea again recently in a pamphlet called "the institute of economic affairs in london," where he suggests this could be done by an act of parliament and the u.k.
aidliament, they have sid that anybody who have met these criteria would be eligible for completely free trade with the united kingdom. that would be a good way of kickstarting the idea of a global free trade association. so, i think there are many ways this can go. but as i say, i think nontariff barriers has to be the thing we look at the most. >> well, i agree with that. and i would also like to build on that. because there was one other model which was posited by the professor minford a few years ago. that was a universal free trade. the idea is that indeed, apparently, there is an idea of economics, called the importance of being unimportant. you don't have preferential free-trade deals in effect. you have universal free trade. so, it takes it out of the hands of government, in putting
particular favorable statuses on watchmaking, or financial services, or what ever. it actually allows the market to drive competition in the market to drive demand. here of ans a sense alternative vision of political reality, as we are living in now. this may not be the thing to implement tomorrow, or possible to implement tomorrow. but certainly, the idea of equivalency, which incidentally, we also see coming out of the european union now with the method to regulations they are looking at alternative ways to structure because they realize that if they cut themselves off, as they have been doing for 43 plus years, then they are going to fall on their face yet again, and again, and again. and so, if the u.k. can adopt an equivalent measure with the united states, and the good work
you have done, and the heritage foundation has also borne out some of those ideas, then that would be absolutely fantastic. but i think the bigger aim, a more global aim, might be to work towards a universal free trade where government is in effect, out of the equation with regards to the safeguard measures and tariffs and non tariff areas. it allows the market and the consumer to find and drive the market. >> i have a feeling that idea will not be entirely unsympathetic to marianne. [laughter] >> >> britain is facing an abundance of riches. it can choose anything from patrick minford's unilateral liberalization of trade with the rest of the world, whereby britain will simply abandon old imports, thereby
making imports in their manufacturing productivity much lower. the nightmare scenario is really not all that bad. the my mir scenario is that you nightmarewith -- the scenario is that you are stuck with wto's. and what do they mean? they mean applying an average tariff on manufacturing goods at about 3.5% and on agricultural goods, about 10%. all of that can be offset through better domestic economic policies in britain, including a larger corporate tax cut. so, abundance of riches. >> i would just point out for the sake of the audience, that if there is any country that has historically lived up to the idea of being a genuine free trading nation, it is britain. from the middle of the 19th century, depending on where you want to put it, to the 1920's or
the 1930's. britain is uniquely positioned in the world to do this because it has relatively few domestic natural resources and therefore, structurally has to be a big importer of a lot of raw materials. which means that the more tariffs you put on raw materials that you import the more you disadvantage your own manufacture exports and reexposhts. so from a structural point of view -- people talk about free trade as being a pie in the sky kind of idea. it's almost uniquely easy and uniquely beneficial for britain to be free trading because it imports a lot of rum materials and a lot of food and have to do so. taxing imports is taxing yourself. other countries -- i personally think it would be good for everyone, but it is especially easy in the u.k. >> just a quick note. some of the largest import
cuts over the last 250 years have happened unilaterally. india and china have liberalized their import regimes before they joined w.t.o. certainly in chinera's case and they have done so because they realized that it was the thing to do. so unilateral is not a crazy idea. it happens every day. >> i have one thing. recommend days when britain was a unilateral free trader, the nascent labour party was very strongly in favor of free trade because they recognize the significant benefits that accrue to the working man as a result of free trade. how manyot sure elections need the left because it was not just the labour party, of course. i'm not sure how many elections the left in britain one because of cheap food or no taxes on bread. it was a significant number. if i had time, i could run through history and come up with several of them. victoria, you have any comments you would like to make? a congressional
perspective, i think the most important point i would like to make is, while universal free trade is an important philosophical ideal and goal, our immediate opportunity really is to work on something bilateral. and i take your point that we largely have free trade. that is why i think the financial services sector is an opportunity in those terms. but in an effort to reclaim from these partnerships, whatever they are, my asthma -- if we need these principles to become the basis of what we are trying to do with free-trade, we need to start with something practical and a specific. and congress does best in that world. the broad philosophical world. [laughter] >> i think unfortunately, that is probably a fairly valuable reminder for all of us to bear in mind.
i believe we have microphones in both aisles. when you raise your hand, i will call on you. if you could state your name and your affiliation, if any. and i would ask everyone to keep questions brief and in the form of an actual question. thank you very much. the gentleman right there. thank you, sir. >> yes, david fitzgerald, retired state department and now a private consultant. i would like to go back to the question of the schedule for the brexit move, whenever that is going to be happening. rather than talking about free trade, per se. it struck me, particularly from the comments from ian, whose last name i cannot say. you talked more about -- it sounded more to me like it was salami slicing, rather than cutting the gordian knot. i think you mentioned a five-year projection for a 25% reduction in eu regulations that the u.k. would be subject to. that does not sound to me like
the rhetoric of two months ago, three months ago, about what brexit really was going to be. it looks to me like we're going to be into a different phase, but it is going to be something that will peter out over the decades. could you comment on that? >> well, there is -- there is a timetable laid out in article indications from the of article 50. to you have two years negotiate whatever deal can be negotiated in that time. it then is concluded by the council with the consent of the european parliament. that is why i suspect, given how long trade agreements only take, the quickest trade agreement in recent years was between australia and the u.s., and that
took just under four years to complete. you're not going to get a comprehensive trade deal done with the eu in that two year period. that is why i suspect that the deal will actually be much more about the phasing out of the eu programs within that two year theod, and also, what -- very contentious question about what happens to the eu national resident in the u.k. and the eu nationals resident in the eu. the fact is, there is such a huge amount of regulation that has been imposed on the u.k. as a result of the eu. and the question of, what would it have done anyway? realistically, you have to look at a longer time period for
repealing regulation. i suspect there will be a prioritize asian within the government and that government departments will be asked to come up with the regulations that can be got rid of quickly. even if they don't go for the regulatory reduction commission that we suggest. there may be some movement very quickly, but i think just realistically, it is a huge task ahead of the government. >> is certainly is. given the weight of eu law over the last 40 years. it is a real challenge for any government, or any future governments, to unwind. i would just point out, in terms of making a trade deal, that it fully happened for a hasged member of the eu left the european union. as a result though, that united
kingdom has currently, all the regulations needed theoretically, to make a trade deal. and the eu has 42 other trade deals around the world currently with countries as different from mexico to south korea, south africa, etc. .k. has a unique position in this respect that already, there are regulations there that will allow it to make a free trade deal in a more appropriate timescale than in comparison to maybe others have taken 10 years or whatever. the other part of it is, if we invoke article 50, we are still under the umbrella of the ecj. be radically, or legally, from day one, start playing around with regulations that we would wish to repeal in due course. that is also a time consideration to think about because as a result, we would be
unable to change with a dramatic potential upside both regulations that the ecj tends t o preside over in that two year process. >> thank you. the gentleman seated in the aisle there. >> i am david smith of "the guardian." farrage is going to speak at a donald trump rally tonight. i am just interested in your reaction to that. you think farage can help drop in the election? and indeed, do you see deeper parallels between the brexit campaign and the trump campaign? >> do you have a comment on that. i am not a u.s. inizen and i do not vote
that election. and i am very glad of that this year. >> the same goes for me. the parallels i think may have been overdone between trump and brexit. the sense is, however, i do see one parallel in the u.s. and the u.k.. that's how the media reported. not naming any state-run media the united kingdom, but ofy tend to not get out london. so they generally have an opinion based upon the london metropolitan police, rather than menking to the country throughout the net kingdom. and i see in many respects in the u.s., media concentrating on what is happening on the hill, rather than what is happening in other parts of the u.k.. that's something about the campaign that may be reflective from the u.k. to the u.s. i don't know however how broadly the parallels between trump and brexit apply. >> there are parallels, sure.
but there is a fundamental difference. that is the entire political establishment in great britain, with possible exception of the far left, has embraced free trade as the future of the united kingdom and stands behind it and wants more of it. whereas in the united states, we are seeing both leading candidates basically opposing and dissing it. and i think that is a terrible -- that will be a terrible choice come november. and that is the fundamental difference. and which makes the election in morenited states say, dangerous. >> i will just add one more final point to that. i have given up trying to predict the results of elections and referendums because it has been proven quite conclusively that people who know something about these things are as good at getting the outcome wrong as everyone else's. but if any candidate achieves a 52% vote share at a 75% turnout,
they have done rather well. and i don't want to predict anything terribly hasty, but i think the winning margin of overall total vote in the notice states come november is going -- comee united states november is going to be a good deal less satisfactory and sizable than the winning outcome than the brexit referendum was. therefore, i am probably inclined to take the referendum outcome very seriously because it demonstrated a pretty sizable consensus on a very large vote big turnout. maybe that tells everyone something they should pay attention to. >> i would just like to concur with rory's observations that the importance of both london and washington listening to the rest of the u.k. and the united states is vital and i think that is a great lesson to learn from both.
right inntleman seated the absolute center of the auditorium. andrew. >> thank you. i am retired. the impression i got from coverage of the brexit phot is that a lot of the boat was basically in opposition to call for refugee immigration, specifically by u.n. secretary general. i am wondering how the brexit vote is going to impact britain's response to calls for refugee andgration from the u.n. other international organizations. understanding, the international trade -- or the international obligation that we have regarding refugees are unchanged by the brexit vote. indeed, there's a wider issue with the european union of migration concerning refugees and so-called economic migrants. the question is how many have
been coming through syria into the european union were generally refugees, or who are indeed economic migrants. that's a question for the european union to solve in that respect. there was in a way, a vote in the brexit vote about immigration, my a concern of immigration. ultimately, the vote was to take back control of the ability to make our own immigration system. and now we have voted to leave the european union. the ability to make an immigration system is now they are. it is just a matter of which immigration model we adopt. and in our particular paper we put forward, the immigration tariff model, which is nationality neutral, it looks to emphasize skills and qualifications, and as a result,
hopefully, if implemented, it will attract the best and the brightest around the world. as a result of the brexit vote, i believe no other international obligation, concerning refugee status and the like, has changed whatsoever. >> let me just add to that. there has been a lot of commentary, especially in the united states, but also in the u.k. to a certain extent, on the immigration and migration issue. i do want to go into the whole detail of it, but you have to go look back at the history of immigration into the u.k. really since the late 1990's. and shortly after tony blair's government comes in in 1997, you of a substantial surge immigration into the u.k.. and almost immediately, you begin to get promises from
politicians saying, yes, the numbers are too high. and yet the numbers continue to climb. and this happened for about 20 years. and over the course of that time , promises were made by it every political party and the consensus in british polling was about 80% the immigration was too high. almost a universal consensus. only on the very far left spectrum was there a rejection of the consensus. final think it was a syrian issue, although i am sure they anxieties about the middle east. i think it was a reaction to almost 20 years of very high immigration, coupled crucially with promises that were never cap why politicians from all parties that they want to do something about it. well, if they had done something about it, perhaps the referendum vote would have gone another way. but they didn't. and so, the referendum vote when
the way it did. and the result is exactly how rory and ian laid out. people said, "you said you were noe going to control the situation, but you haven't." "now, we're going to control it for you." i think the system that ian and out deserves a lot of careful consideration. it avoids the difficulty of the points system. it would allow the u.k. to remain open, which i think is a vital talent and skill from everywhere around the world. >> i just have one more point, which is relevant to the refugee issue in relation to the immigration tariff. people who are fleeing countries spend an awful lot of money, they pool resources to be able to get out of those hellholes. the trouble is, at the moment, that money is going to
criminals, who then have no compunction of putting them to sink, leaky boats that and other terrible, terrible things. any humane person would utterly condemn them. an immigration tariff basically says, you will still pay money, but he will go to the ofvernment that you are -- the country that you wanted to come to. and all must as a hedge against the possibility that you will use their welfare system. by our calculations, the immigration tariff would actually provide a significant benefit, not just in terms of human capital, but also as a resource stream to governments, that they can then use to deal with any other immigration issues that come up. >> i think we have time unfortunately, for only one mark weston.
does take a question from the gentleman back here. analyst.n independent i was just curious if the panel could describe what you think the brexit will do to the political legitimacy of the eu, particularly as it relates to some countries who have been looking to get into the eu for the last 20 or so years. >> that is a very interesting closing question. let's let rory and ian you with that first. i think the answer to that will depend on what direction the eu takes now. i think marianne lehto a very possible scenario -- laid out a very plausible scenario. the eu could become serious about things like subsidiarity. if the eu have been serious subsidiarity, the brexit vote may never have
happened. what we may see is an eu that is more responsive to the demands of its member states, and less controlling of them when they enter. again, the former prime minister of the czech of public pointed out that he had spent years repealing all the soviet laws and when he joined the eu, he had to start re-imposing them. [laughter] subsidiarity is treated seriously, it is not as big a problem. at which point i think the eu becomes more attractive to new nations than it is at the moment. >> i do agree with that. but i would also note that over the past few days, chancellor merkel and president hollande to president renzi have met discuss the future direction of
the european union. the european union cannot insulate itself with its three prominent members, defining terms for other member states. they need to learn from their totakes and actually broaden take into consideration others on the council. ultimately, if they don't, they might go the way of the league of nations, which effectively scenario with the netted kingdom and france looking to its or power without taking any consideration for the other member states. so, the eu does have a choice between heightened centralization defined by a cleek, or indeed, giving power back to member scenario with the netted kingdom and states and allowing for states that may still wish, god help them, to join the eu, confidence that
they will be listened to. >> i guess, my question in response to that, will be, where are these big new sessions going to come from? i don't think that the eu's negotiations with turkey have ever been serious. is ane, to my mind, very long way away from being able to join the european union. yes, there are baltic possibilities. but where is the next big area of growth for the eu, leaving aside all of the questions? >> >> i like to end on an optimistic note. i would say the existence of the insufferablese barrier on any serious control of any member states, even if that eu desires to do such a thing. thathere is no evidence
they have the desire to support a greater degree of sovereignty for nationstates. even if it did, the euro is going to exercise a compelling pressure to clamp down even more tightly on remaining nationstates. for fear of another greece. so, i am perfectly willing to hope for the best, but unfortunately, in this case, i fear, as i have in the past >>, for the worst. and victoriarianne azarenka make any closing comments. >> i think the eu will still remain a desirable place to be a member of four countries which are very poor. an good example, belarus, ukraine, georgia would love to join, i'm sure. the question is whether the eu
can maintain the prosperous well-run countries, which also infuse the european institutions with a certain level of accountability, such as that is, or if you will, good governance, opposition to corruption and so on. if denmark goes, if holland goes, if sweden goes, then you're really stuck with southern and european eastern states and the eu becomes a something very different. and finally, in terms of what will the eu look like, getting out of the eu, or opposing the eu, does not mean you ar .elieve in isolationism the discussion is about super national versus intergovernmental. if you can't return to an intergovernmental way of doing things, you also gain immediately democratic accountability.
because it is the government of united kingdom are the government of denmark or the government of sweden, if they sign up for a treaty, they have to have support from the country that elected them. if they lose the support, the country withdraws from the treaty. in the super national way of doing things, the eu tells you about the way you behave and therefore, it has no democratic legitimacy. intergovernmental alism implies greater democratic accountability. >> i think the great challenge to the eu is to define its rationale. i was struck when they say we should go to the graveyards of world war ii. that rationale, preventing another massive land war in europe, which is what spawned the european project, is not our rationale in 2016. if the leaders of the eu are
still using dutch keeping the germans out of paris as their prime goal, i think we have larger problems on her hands. and so, i think that then becomes the challenge to the eu, to figure out what is the purpose of this in a 21st-century context? >> i think that is a really good point i wish to close. let me thank ian, rory, marion, theirctory oia for all of comments, and all of you at the heritage foundation. [applause]
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